“This ruling blows the insulin racket wide open,’’ said Steve Berman, a plaintiffs’ lawyer who is one of the leaders of the potential class-action case. The ruling “clears the way for us to begin obtaining discovery from the manufacturers and PBMs so we can shine the light on exactly what has driven insulin prices sky-high,’’ he said.

Insulin Makers Face Drug Pricing Suit

The plaintiffs have accused three companies of raising prices 150% over five years.

By Jef Feeley and Robert Langreth | February 18, 2019 at 04:08 AM

Novo Nordisk A/S and two other insulin makers must face claims they gouged diabetes patients through deceptive price lists for their life-saving drugs.

U.S. District Judge Brian Martinotti in New Jersey on Friday allowed a proposed class-action lawsuit filed by 67 diabetics against Novo, Eli Lilly & Co. and the U.S. unit of French drugmaker Sanofi to proceed on consumer-fraud allegations tied to skyrocketing insulin prices. The judge threw out the plaintiffs’ racketeering claims.

The ruling comes as a growing number of cases targeting insulin makers’ price hikes have been filed in Martinotti’s court and gathered before the judge for pretrial information exchanges. Plaintiffs contend companies are illegally raising insulin prices to provide rebates for pharmacy-benefit managers who decide which drugs get on preferred insurance lists.

“This ruling blows the insulin racket wide open,’’ said Steve Berman, a plaintiffs’ lawyer who is one of the leaders of the potential class-action case. The ruling “clears the way for us to begin obtaining discovery from the manufacturers and PBMs so we can shine the light on exactly what has driven insulin prices sky-high,’’ he said.

“We’re pleased with the court’s dismissal of the RICO claims and numerous state law claims, and will continue to defend the company against any remaining claims,” Ken Inchausti, a U.S.-based spokesman for Bagsvaerd, Denmark-based Novo, the world’s biggest maker of insulin, said in an email.

Ashleigh Koss, a spokeswoman for Paris-based Sanofi, said while the allegations in the suit are meritless, the company couldn’t comment on Martinotti’s ruling because the case was ongoing. Gregory Kueterman, a Lilly spokesman, said while the company would continue to defend itself from the insulin allegations, he couldn’t comment on the judge’s decision.

The suit accuses the companies of raising insulin sticker prices by more than 150% over five years, forcing diabetics to forgo the drug, take less insulin than needed or use expired versions. The complaint notes some patients intentionally failed to take proper amounts of insulin to wind up in emergency rooms, where they could get free samples of the drug.

The crux of the suit targets the companies’ allegedly deceptive pricing practices. Diabetics say insulin manufacturers’ sticker prices are different from the prices insurers pay after discounts are awarded to pharmacy-benefit managers. The patients contend the rebates amount to kickbacks for benefit managers, who recommend which drugs should be covered by insurers. Higher list prices mean larger-percentage rebates out of which PBMs take a slice.

The judge found patients could press ahead with claims that the rebate system violated consumer-protection laws in states such as New Jersey, New York, Wisconsin, Tennessee and New Hampshire, according to court filings.

While Martinotti agreed with the companies’ arguments that patients couldn’t make a proper racketeering claim over the rebates, he gave plaintiffs an opportunity to amend their suit to address defects in the claim.

The case is Chaires v. Novo Nordisk Inc., 17-cv-699, U.S. District Court, District of New Jersey (Trenton).

“Direct primary care (DCP) — a fee-based model that gives individuals unlimited access to a primary care doctor for anywhere between $60 to $150 a month, without insurance being billed — is the “future of healthcare….”

NASHVILLE — There’s a new healthcare model that’s not only changing the way people get and receive care — it’s also an employee benefit that’s about to blow up.

Direct primary care (DCP) — a fee-based model that gives individuals unlimited access to a primary care doctor for anywhere between $60 to $150 a month, without insurance being billed — is the “future of healthcare,” Dan Thompson, a healthcare consultant and president of Thompson Risk, said Thursday during a panel at Employee Benefit Adviser’s Workplace Benefits Renaissance conference. The model covers much of what a patient needs, including tests, consulting, drugs and treatment, typically at a much lower cost than through insurance.

The model is fairly new, but it’s gaining momentum: There are roughly 1,000 DCP practices across 48 states and Washington, the panelists said this week. The majority of patients who use the model are families and individuals who pay for the service out of pocket, but a growing number of employers are turning to the practice as an employee benefit offering.

Because it’s still a fairly unknown system, panelists contended direct primary care is a huge opportunity for employers and brokers.

“We’re excited about the growth, but it’s still a budding movement,” said Jay Keese, CEO of Capitol Advocates, a Washington- based policy firm specializing in health issues. “The broker community, in particular, can be a huge part in growing this model because it’s a unique opportunity that most people aren’t focusing on.”

Curtis Cannon, managing partner at consulting firm Axis Recovery, said it’s important to note that DCP is not an insurance replacement. DCP typically works alongside a health plan and can be offered by employers as an additional benefit, in which companies can choose to cost share the expense with their employees. But, Cannon said, the model can drastically change healthcare services and delivery and create better relationships among employees and their doctors, which in turn can result in better employee healthcare.

“As a physician, I see that primary care is conspicuously missing from healthcare,” said Dr. Thomas Spain, founder of Rocket City Health, a direct primary care practice in Huntsville, Alabama. “[Primary care is] so hard to access that most Americans haven’t experienced good primary care. [DCP is] a way to put primary care back as a foundation. It stands out for its simplicity but it’s also so powerful.”

In a direct primary care model, employees have the advantage of more time alone with their doctor for discussion and medical planning, as well as access to easy and frequent communication methods. Employees can text, call or email their doctor directly at any time.

“So when Tom goes in for the flu, it’s not just about treating the flu; it’s about how he might prevent the flu next time,” Keese said. “It’s a great employee benefit because people love it.”

It also can eliminate the cost confusion that comes with insurance, Cannon said. “When you go to a physician’s visit, you get a bill. That’s not what happens with DCP. There’s no copays, no deductible, no surprise bills.”

Employers that offer DCP typically still offer traditional health insurance to cover services rendered outside of primary care, including specialty doctor visits, lab tests, surgery and ER visits. But, the panelists said, utilization of these services often drops once direct primary care enters the picture. That’s because greater and more frequent access to primary care doctors reduces the likelihood that employees will improperly overutilize emergency rooms and urgent care clinics, which often results in more unnecessary and costly tests and procedures.

For many employees, benefits enrollment can be tedious—sometimes even scary. They don’t want to make a mistake—and who can blame them?

That’s a big benefit for employers, too. In fact, employers that offer direct primary care as a benefit to their employees see better outcomes and patient satisfaction, while employer claims show savings of up to 20% of total cost of care, Keece said.

DCP’s biggest potential influence goes even further.

“[This is really about] moving to a model where an employer or a plan or an individual can pay a doctor for a personal relationship,” Keece said. “And that relationship is often the secret sauce in [solving] healthcare. It can really accomplish a lot.”

Bill, I still think that the evidence shows that, in the main, DPC is old-fashioned, without much management infrastructure, weak and lacking in evidence of efficacy. The smart money is on practices that have geared up their full-continuum risk management capabilities. I wrote about that recently here.

Last month, we received our license to sell Association Health Plans (AHPs) to medical groups in Texas through the Oklahoma State Medical Association (OSMA). They have a proven track record of providing significant savings to their members and offer a broad range of health plans.

All of the plan options in Texas will utilize a combination of a Physician PPO network and Reference Based Pricing. We are excited to give our clients new and cost-effective options that have not been previously available, such as no cost surgery and lab work at select facilities.

To learn more about the Oklahoma State Medical Association, click on the button below or email sales@abadmin.com. And for those of you who don’t live in Texas, stay tuned. We want to expand Association Health Plans to more states and more industries!

EDITOR’S NOTE: We are familiar with the Oklahoma State Medical Association program and it’s administrator / risk manager. This MEWA has had a successful track record and is well managed. Insurance agents who place business with a MEWA should check to see if their E&O covers the sale and placement of MEWA’s. Almost all E&O policies exclude MEWA’s. Prospective clients should ask too.

]]>How You Can Save On Health Care in Texashttp://blog.riskmanagers.us/?p=30674
Thu, 21 Feb 2019 14:59:46 +0000http://blog.riskmanagers.us/?p=30674Just like 4.3 million other Texans, they have zero health coverage. They simply cannot afford health insurance. “We don’t have health insurance because it’s just outrageous. We have to choose food or clothing over health insurance, and food and clothing are just going to come first,” Kevin Doetticher said.

HOUSTON – At 7 a.m., Kevin and Shelley Doetticher, of Spring, are just starting what will be another back-breaking day of cleaning out dirty pools.

“We work pretty hard. Most days, it’s eight to 14 hours a day in the heat, the rain, the whatever. We work,” Kevin Doetticher said, with sweat glistening on his face.

The Doettichers work side by side, both on the job, running Kevin’s Pool Services, and at home, raising their three children.

And just like 4.3 million other Texans, they have zero health coverage. They simply cannot afford health insurance.

“We don’t have health insurance because it’s just outrageous. We have to choose food or clothing over health insurance, and food and clothing are just going to come first,” Kevin Doetticher said.

“We price it out. We were looking at spending around $900 a month on insurance with a $5,000 deductible that we would have to meet before the insurance would pay for anything,” Shelley Doetticher said.

Luckily for the couple, they found an incredibly cheap alternative to going to the doctor’s office.

It’s a place called Express Family Care in New Caney, and it charges just $50 for an office visit.

“I went in and I had a sick kid and, you know, the first thing you ask when you are paying is: How much is this going to cost? And they said $50 and we were, like, no way,” Shelley Doetticher said.

Melissa Herpal, who is a nurse practicioner, who created Express Family Clinic. She now owns three of them — in Spring, Conroe/Montgomery and New Caney. The clinics operate on one simple idea: Why not bypass the expensive insurance companies who dictate much of how health care is priced and charge everyone who comes through the door, insured or not, just $50?

“You come in and need to be seen. Our office visit is a flat $50 and that’s the price for everybody, whether you have insurance or not,” Herpal said.

Some services are even cheaper than $50.

If your child needs a flu shot, it’s just $10.

A full sports exam for school, with an electrocardiogram, is just $30.

If your kid needs a vaccine, it’s $10.

And there’s one more big difference — Herpal doesn’t take appointments.

When you need help, you just walk in and get the help you need.

“Appointments just clutter up the day and waste time. If you come in here before 5 (p.m.), you are going to be seen,” Herpal said.

But what do you do if you have a more serious problem?

Let’s say you need an expensive test, such as a magnetic resonance imaging scan, Computerized tomography, an X-ray or a positron emission tomography for cancer.

At Green Imaging, which has 30 locations in Houston, board-certified radiologists will read your imaging at prices that are dramatically lower than what you would pay at a hospital.

Dr. Cristin Dickerson, a radiologist, started the company several years ago and now has arrangements with over 400 hospitals nationwide.

Her idea is as brilliant as it is simple.

She buys unused image machines at other clinics and offices at a huge discount and passes the savings on to her patients.

By limiting her overhead, she can offer people a great deal.

An example is the price of an MRI.

“Our MRI costs $250 to $450 in Houston. At the hospital systems in Houston, it will typically run you $1,500 to $1,700. In the specialty hospitals, cancer hospitals, children’s hospitals, it’s a multiplier of that — up to the $5,000 to $7,000 range — for the very same test,” Dickerson said.

In Texas, the uninsured capital of the United States when it comes to health care, there is another super-low-cost health alternative, called Legacy Community Health.

It’s a federally qualified health clinic with 34 locations, and it uses a sliding fee structure in which your payment is based on how much money you earn.

“You can have private health insurance and come here and we’ll take that. You can have no money at all, come here and we will serve you. I’d say, on average, most people we see may pay about $30 a visit,” Dr. Ann Barnes, chief medical officer at Legacy Community Health, said.

Lakeisha Parker is a grandmother and former nurse’s aide who now has breast cancer.

Before she found Legacy and signed up for care, she could not even afford to see a doctor, so she often ignored her health problems or tried home remedies to cure them.

“It’s the truth — $50, I would say, is the most I’ve ever paid for health care here, to receive all my medical care at Legacy, and that includes my prescriptions that I’ve needed here,” she said.

Parker, having survived cancer, knows how valuable this place is to her and thousands of other Texans.

It’s only six minutes. I hope you enjoy it! Let me know what you think — and please share widely!

As always, thanks for your support.

Cheers Jeanne

]]>Insurers Hand Out Cash and Gifts To Sway Brokers Who Sell Employer Health Planshttp://blog.riskmanagers.us/?p=30664
Wed, 20 Feb 2019 16:35:32 +0000http://blog.riskmanagers.us/?p=30664Industry wide, transparency is not the standard. ProPublica sent a list of questions to 10 of the largest broker agencies, some worth $1 billion or more, including Marsh & McLennan, Aon and Willis Towers Watson, asking if they took bonuses and commissions from insurance companies, and whether they disclosed them to their clients. Four firms declined to answer; the others never responded despite repeated requests.

“Set sail for Bermuda,” says insurance giant Cigna, offering top-selling brokers five days at one of the island’s luxury resorts.

Health Net of California’s pitch is not subtle: A smiling woman in a business suit rides a giant $100 bill like it’s a surfboard. “Sell more, enroll more, get paid more!” In some cases, its ad says, a broker can “power up” the bonus to $150,000 per employer group.

Not to be outdone, New York’s EmblemHealth promises top-selling brokers “the chance of a lifetime:” going to bat against the retired legendary New York Yankees pitcher Mariano Rivera. In another offer, the company, which bills itself as the state’s largest nonprofit plan, focuses on cash: “The more subscribers you enroll … the bigger the payout.” Bonuses, it says, top out at $100,000 per group, and “there’s no limit to the number of bonuses you can earn.”

Such incentives sound like typical business tactics, until you understand who ends up paying for them: the employers who sign up with the insurers — and, of course, their employees.

Human resource directors often rely on independent health insurance brokers to guide them through the thicket of costly and confusing benefit options offered by insurance companies. But what many don’t fully realize is how the health insurance industry steers the process through lucrative financial incentives and commissions. Those enticements, critics say, don’t reward brokers for finding their clients the most cost-effective options.

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Here’s how it typically works: Insurers pay brokers a commission for the employers they sign up. That fee is usually a healthy 3 to 6 percent of the total premium. That could be about $50,000 a year on the premiums of a company with 100 people, payable for as long as the plan is in place. That’s $50,000 a year for a single client. And as the client pays more in premiums, the broker’s commission increases.

Commissions can be even higher, up to 40 or 50 percent of the premium, on supplemental plans that employers can buy to cover employees’ dental costs, cancer care or long-term hospitalization.

Those commissions come from the insurers. But the cost is built into the premiums the employer and employees pay for the benefit plan.

Now, layer on top of that the additional bonuses that brokers can earn from some insurers. The offers, some marked “confidential,” are easy to find on the websites of insurance companies and broker agencies. But many brokers say the bonuses are not disclosed to employers unless they ask. These bonuses, too, are indirectly included in the overall cost of health plans.

These industry payments can’t help but influence which plans brokers highlight for employers, says Eric Campbell, director of research at the University of Colorado Center for Bioethics and Humanities.

Critics say the setup is akin to a single real estate agent representing both the buyer and seller in a home sale. A buyer would not expect the seller’s agent to negotiate the lowest price or highlight all the clauses and fine print that add unnecessary costs.

“If you want to draw a straight conclusion: It has been in the best interest of a broker, from a financial point of view, to keep that premium moving up,” says Jeffrey Hogan, a regional manager in Connecticut for a national insurance brokerage and one of a band of outliers in the industry pushing for changes in the way brokers are paid.

As the average cost of employer-sponsored health insurance premiums has tripled in the past two decades, to almost $20,000 for a family of four, a small, but growing, contingent of brokers are questioning their role in the rise in costs. They’ve started negotiating flat fees paid directly by the employers. The fee may be a similar amount to the commission they could have earned, but since it doesn’t come from the insurer, Hogan says, it “eliminates the conflict of interest” and frees brokers to consider unorthodox plans tailored to individual employers’ needs. Any bonuses could also be paid directly by the employer.

Brokers provide a variety of services to employers. They present them with benefits options, enroll them in plans and help them with claims and payment issues. Insurance industry payments to brokers are not illegal and have been accepted as a cost of doing business for generations.

When brokers are paid directly by employers, the results can be mutually beneficial. In 2017, David Contorno, the broker for Palmer Johnson Power Systems, a heavy-equipment distribution company in Madison, Wisconsin, saved the firm so much money while also improving coverage that Palmer Johnson took all 120 employees on an all-expenses paid trip to Vail, Colorado, where they rode four-wheelers and went whitewater rafting. In 2018, the company saved money again and rewarded each employee with a health care “dividend” of about $700.

Contorno was not being altruistic. He earned a flat fee, plus a bonus based on how much the plan saved, with the total equal to roughly what he would have made otherwise.

Craig Parsons, who owns Palmer Johnson, says the new payment arrangement puts pressure on the broker to prevent overspending. His previous broker, he says, didn’t have any real incentive to help him reduce costs. “We didn’t have an advocate,” he says. “We didn’t have someone truly watching out for our best interests.” (The former broker acknowledged there were some issues, but said it had provided a valuable service.)

Working for employers, not insurers

Contorno is part of a group called the Health Rosetta, which certifies brokers who agree to follow certain best practices related to health benefits, including eliminating any hidden agreements that raise the cost of employee benefits. To be certified, brokers (who refer to themselves as “benefits advisers”) must disclose all their direct and indirect sources of income — bonuses, commissions, consulting fees, for example — and who pays them, to the employers they advise.

David Contorno at an office in Mooresville, NC. Contorno is the founder of E Powered Benefits which is aimed at reducing the cost of healthcare coverage for employers by cutting ties between brokers and insurance companies.

Dave Chase, a Washington businessman, created Rosetta in 2016 after working with tech health startups and launching Microsoft’s services to the health industry. He says he saw an opportunity to transform the health care industry by changing the way employers buy benefits. He says brokers have the most underestimated role in the health care system.

“The good ones are worth their weight in gold,” Chase says. “But most of the benefit brokers are pitching themselves as buyer’s agents, but they are paid like a seller’s agent.”

There are only 110 Rosetta certified brokers in an industry of more than 100,000, although others who follow a similar philosophy consider themselves part of the movement.

From the employer’s point of view, one big advantage of working with brokers like those certified by Rosetta, is transparency. Currently, there’s no industry standard for how brokers must disclose their payments from insurance companies, so many employers may have no idea how much brokers are making from their business, says Marcy Buckner, vice president of government affairs for the National Association of Health Underwriters, the trade group for health benefits brokers. And thus, she says, employers have no clear sense of the conflicts of interest that may color their broker’s advice to them.

Buckner’s group encourages brokers to bill employers for their commissions directly to eliminate any conflict of interest, but, she says, it’s challenging to shift the culture. Nevertheless, Buckner says she doesn’t think payments from insurers undermine the work done by brokers, who must act in their clients’ best interests or risk losing them. “They want to have these clients for a really long term,” Buckner says.

Industrywide, transparency is not the standard. ProPublica sent a list of questions to 10 of the largest broker agencies, some worth $1 billion or more, including Marsh & McLennan, Aon and Willis Towers Watson, asking if they took bonuses and commissions from insurance companies, and whether they disclosed them to their clients. Four firms declined to answer; the others never responded despite repeated requests.

Insurers also don’t seem to have a problem with the payments. In 2017, Health Care Service Corporation, which oversees Blue Cross Blue Shield plans serving 15 million members in five states, disclosed in its corporate filings that it spent $816 million on broker bonuses and commissions, about 3 percent of its revenue that year. A company spokeswoman acknowledged in an email that employers are actually the ones who pay those fees; the money is just passed through the insurer. “We do not believe there is a conflict of interest,” she says.

In one email to a broker reviewed by ProPublica, Blue Cross Blue Shield of North Carolina called the bonuses it offered — up to $110,000 for bringing in a group of more than 1,000 — the “cherry on top.” The company told ProPublica that such bonuses are standard and that it always encourages brokers to “match their clients with the best product for them.”

Cathryn Donaldson, spokeswoman for the trade group America’s Health Insurance Plans, wrote in an email that brokers are incentivized “above all else” to serve their clients. “Guiding employees to a plan that offers quality, affordable care will help establish their business and reputation in the industry,” she wrote.

Some insurer’s pitches, however, clearly reward brokers’ devotion to them, not necessarily their clients. “To thank you for your loyalty to Humana, we want to extend our thanks with a bonus,” says one brochure pitched to brokers online. Horizon Blue Cross Blue Shield of New Jersey offered brokers a bonus as “a way to express our appreciation for your support.” Empire Blue Cross told brokers it would deliver new bonuses “for bringing in large group business … and for keeping it with us.”

Delta Dental of California’s pitches appears to go one step further, rewarding brokers as “key members of our Small Business Program team.”

ProPublica reached out to all the insurers named in this story, and many didn’t respond. Cigna said in a statement that it offers affordable, high-quality benefit plans and doesn’t see a problem with providing incentives to brokers. Delta Dental emphasized in an email it follows applicable laws and regulations. And Horizon Blue Cross said its gives employers the option of how to pay brokers and discloses all compensation.

The effect of such financial incentives is troubling, says Michael Thompson, president of the National Alliance of Healthcare Purchaser Coalitions, which represents groups of employers who provide benefits. He says brokers don’t typically undermine their clients in a blatant way, but their own financial interests can create a “cozy relationship” that may make them wary of “stirring the pot.”

Employers should know how their brokers are paid, but health care is complex, so they are often not even aware of what they should ask, Thompson says. Employers rely on brokers to be a “trusted adviser,” he says. “Sometimes that trust is warranted and sometimes it’s not.”

Bad faith tactics

When officials in Morris County, New Jersey, sought a new broker to manage the county’s benefits, they specified that applicants could not take insurance company payouts related to their business. Instead, the county would pay the broker directly to ensure an unbiased search for the best benefits. The county hired Frenkel Benefits, a New York City broker, in February 2015.

Now, the county is suing the firm in Superior Court of New Jersey, accusing it of double-dipping. In addition to the fees from the county, the broker is accused of collecting a $235,000 commission in 2016 from the insurance giant Cigna. The broker got an additional $19,206 the next year, the lawsuit claims. To get the commission, one of the agency’s brokers allegedly certified, falsely, that the county would be told about the payment, the suit says. The county claims it was never notified and never approved the commission.

The suit also alleges the broker “purposefully concealed” the costs of switching the county’s health coverage to Cigna, which included administrative fees of $800,000.

In an interview, John Bowens, the county’s attorney, says the county had tried to guard against the broker being swayed by a large commission from an insurer. The brokers at Frenkel did not respond to requests for comment. The firm has not filed a response to the claims in the lawsuit. Steven Weisman, one of attorneys representing Frenkel, declined to comment.

Sometimes employers don’t find out their broker didn’t get them the best deal until they switch to another broker.

Josh Butler, a broker in Amarillo, Texas, who is also certified by Rosetta, recently took on a company of about 200 employees that had been signed up for a plan that had high out-of-pocket costs. The previous broker had enrolled the company in a supplemental plan that paid workers $1,000 if they were admitted to the hospital to help pay for uncovered costs. But Butler says the premiums for this coverage cost about $100,000 a year, and only nine employees had used it. That would make it much cheaper to pay for the benefit without insurance.

Butler suspects the previous broker encouraged the hospital benefits because they came with a sizable commission. He sells the same type of policies for the same insurer, so he knows the plan came with a 40 percent commission in the first year. That means about $40,000 of the employer’s premium went into the broker’s pocket.

Butler and other brokers say the insurance companies offer huge commissions to promote lucrative supplemental plans like dental, vision and disability. The total commissions on a supplemental cancer plan one insurer offered come to 57 percent, Butler says.

These massive year-one commissions lead some unscrupulous brokers to “churn” their supplemental benefits, Butler says, convincing employers to jump between insurers every year for the same type of benefits. The insurers don’t mind, Butler says, because the employers end up paying the tab. Brokers may also “product dump,” Butler says, which means pushing employers to sign employees up for multiple types of voluntary supplemental coverage, which brings them a hefty commission on each product.

Carl Schuessler, a broker in Atlanta who is certified by the Rosetta group, says he likes to help employers find out how much profit insurers are making on their premiums. Some states require insurers to provide the information, so when he took over the account for the Gasparilla Inn, an island resort on the Gulf Coast of Florida, he obtained the report for the company’s recent three years of coverage with UnitedHealthcare. He learned that the insurer had only paid out in claims about 65 percent of what the Inn had paid in premiums.

But in those same years the insurer had increased the Inn’s premiums, says Glenn Price, its chief financial officer. “It’s tough to swallow” increases to our premium when the insurer is making healthy profits, Price says. UnitedHealthcare declined to comment.

Schuessler, who is paid by the Inn, helped it transition to a self-funded plan, meaning the company bears the cost of the health care bills. Price says the Inn went from spending about $1 million a year to about $700,000, with lower costs and better benefits for employees, and no increases in three years.

A need for regulation

Despite the important function of brokers as middlemen, there’s been scant examination of their role in the marketplace.

Don Reiman, head of a Boise, Idaho, broker agency and a financial planner, says the federal government should require health benefit brokers to adhere to the same regulation he sees in the finance arena. The Employee Retirement Income Security Act, better known as ERISA, requires retirement plan advisers to disclose to employers all compensation that’s related to their plans, exposing potential conflicts.

The Department of Labor requires certain employers that provide health benefits to file documents every year about their plans, including payments to brokers. The department posts the information on its website.

But the data is notoriously messy. After a 2012 report found 23 percent of the forms contained errors, there was a proposal to revamp the data collection in 2016. It is unclear if that work was done, but ProPublica tried to analyze the data and found it incomplete or inaccurate. The data shortcomings mean employers have no real ability to compare payments to brokers.

***

About five years ago, Contorno, one of the leaders in the Rosetta movement, was blithely happy with the status quo: He had his favored insurers and could usually find traditional plans that appeared to fit his clients’ needs.

Today, he regrets his role in driving up employers’ health costs. One of his LinkedIn posts compares the industry’s acceptance of control by insurance companies to Stockholm Syndrome, the feelings of trust a hostage would have toward a captor.

Contorno began advising equipment distribution company Palmer Johnson in 2016. When he took over, the company had a self-funded plan and its claims were reviewed by an administrator owned by its broker, Iowa-based Cottingham & Butler. Contorno brought in an independent claims administrator who closely scrutinized the claims and provided detailed cost information. The switch led to significant savings, says Parsons, the company owner. “It opened our eyes to what a good claims review process can mean to us,” he says.

Brad Plummer, senior vice president for employee benefits for Cottingham & Butler, acknowledged “things didn’t go swimmingly” with the claims company. But overall his company provided valuable service to Palmer Johnson, he says.

Contorno also provided resources to help Palmer Johnson employees find high-quality, low-cost providers, and the company waived any out-of-pocket expense as an incentive to get employees to see those medical providers. If a patient needed an out-of-network procedure, the price was negotiated up front to avoid massive surprise bills to the plan or the patient.

The company also contracted with a vendor for drug coverage that does not use the secret rebates and hidden pricing schemes that are common in the industry. Palmer Johnson’s yearly health care costs per employee dropped by more than 25 percent, from about $11,252 in 2015 to $8,288 in 2018. That’s lower than they’d been in 2011, Contorno says.

“Now that my compensation is fully tied to meeting the clients’ goals, that is my sole objective,” he says. “Your broker works for whoever is cutting them the check.”

“Renegade PCPs long for independent practices where their patient care decisions are not so influenced by their employers’ interests……………….By recapturing control of care and cost, they also are re-establishing primary care’s primacy within health care……………..”

In these and most primary care breakaways from large health systems, the complaints are generally the same. Within a fee-for-service, volume-driven environment, primary care’s role, at least in part, is to capture patients and feed the machine. Health systems pressure PCPs to refer patients internally as often as possible for lucrative diagnostics and procedures.

By contrast, most renegade PCPs long for independent practices where their patient care decisions are not so influenced by their employers’ interests. Most aspire to deliver and coordinate the best and most efficient care possible and to be rewarded for excellent medicine. As the health care marketplace increasingly lurches toward risk-based arrangements, more primary care practices are being reconstituted to deliver value. These new practices are not only designed to share in the value they’re creating. By recapturing control of care and cost, they also are re-establishing primary care’s primacy within health care.

Primary care is the most embattled, underappreciated, and constrained medical specialty. American health care’s decades-long subjugation of primary care has ravaged this specialty, demoralizing its practitioners and discouraging medical students who might otherwise seek the deeply personal gratification of a primary care career. With far lower salaries than specialists, only the most idealistic medical students now choose primary care. About 5% of US medical students pursue primary care, while in other industrialized nations the rate is closer to 50%.

Two main culprits have been behind primary care’s difficulties. First is the American Medical Association (AMA), whose secretive Relative Value Scale Update Committee, or RUC, has had a sole source contract with the Center for Medicare and Medicaid Services (CMS) to value every medical procedure for nearly 30 years. With representation on the RUC dominated by specialists, it has systematically advanced specialties’ interests by undervaluing primary care and overvaluing specialty services.

The AMA’s approach has been reinforced by commercial payment designs that favored the higher health plan profits associated with specialty care’s higher overall costs. Health plans gradually reduced primary care’s reimbursement. To compensate and maintain overall revenues, physicians reduced office visit durations, which in turn increased specialty referrals. Referral rates of around 12% with a 20-minute established primary care office visit jump to 25%-35% when the visit is halved to 10 minutes. Worse, increasingly rushed PCPs tended to cede control of downstream care to specialists who had a financial stake in the services provided.

Eager to capture primary care’s referrals, health systems around the country have employed an increasing percentage of PCPs in recent years, relieving them of most administrative responsibilities but insisting that they drive referrals into the organization. About one-third of all primary care doctors now work in practices that are at least partially owned by hospitals, but most PCPs have chafed under these arrangements.

Alternatives were inevitable. Volume-based models stoked health system revenues, but increasingly infuriated the businesses and unions paying higher bills. One form of worksite primary care clinic – built on the concept of an advanced medical home – offered patients and purchasers substantially better health outcomes and/or lower costs. These entities were more than primary care. Their clinics had a primary care foundation, but were also designed to oversee and manage care and cost in any part of the health care continuum touched by the patient. An advantage was their use of proven management tools that consistently delivered better results in high-value niches like drug cost management, cardiometabolic care and musculoskeletal care. Companies like Care ATC, Vera Whole Health, Iora Health and Wellness for Life have designed their clinic operations around aggressive full continuum risk management, which allows them to deliver strong health outcomes and cost performance.

Other primary care organizations have pursued the risk management opportunities available through Medicare’s Accountable Care Organization program or through Medicare Advantage programs. Examples abound, but here are a few from the Florida market:

Island Doctors, led by Roy Hinman MD and with offices throughout Northeast Florida, has been globally capitated for Medicare Advantage since 1999 and now has more than 23,000 lives under management.

ChenMed, based in Miami, has more than 50 full-risk primary care medical practices for seniors in seven states.

The Palm Beach Accountable Care Organization (PBACO), self-financed by independent physician practices, achieved the second-highest Medicare savings of any program for three straight years before becoming the top saver in 2016. Serving 79,000 Medicare lives, this ACO is comprised of 275 primary care physicians and 175 specialists. PBACO’s program saved the Medicare Trust Fund more than $211 million over four years. They kept more than $101 million, investing 15% in management infrastructure and distributing 85% among physician members.

One colleague working in the costly South Florida market tells me that the vibrant Medicare Advantage plans there have developed full-risk arrangements with an array of primary care groups that have become extremely sophisticated and that are generating medical loss ratios between 65-75%. These practices are capturing a fair share of the savings that, in older models, would often have gone for inappropriate, unnecessary, or less efficient downstream care. In a market with out-of-control health care costs, he reports that many PCPs in these arrangements have seven-figure incomes.

There’s no question that the transition to value-based arrangements has been and continues to be excruciatingly slow. Even so, there has been an explosion in value-based practices that are grounded in primary care but integrate a host of high performance risk management techniques. In this sense, primary care is becoming not just the front end of the health system, but the platform for full continuum care coordination and management.

It is not unreasonable to expect that the value-based seeds that have been planted in Medicare Advantage, Managed Medicaid, and, to a lesser degree, self-insured employer health plans, will get accelerating traction in the next couple years. Primary care practices that think about managing full continuum risk will experience success that was unimaginable five years ago, while reclaiming far more control over health system dynamics. It is a big part of the solution we seek.

]]>How Dare You! 177% of Medicare Is Insulting!http://blog.riskmanagers.us/?p=30641
Sun, 17 Feb 2019 22:18:44 +0000http://blog.riskmanagers.us/?p=30641The state of North Carolina has adopted Reference Based Pricing for their state employee benefit program to become effective in 2020. The reference price will be pegged at 177% of Medicare. That has caused an uproar with the state’s hospitals and they are fighting back hard.

If 177% of Medicare is not enough, what is? How much are you paying for health care through your PPO network? You don’t know do you?. Chances are you’re paying a lot more than 177%. In fact we know you are. So how do you feel about that? If you feel “foolish, ignorant, dumb, uneducated, victimized” congratulations, you have successfully self-diagnosed a systemic affliction shared by most of your fellow countrymen. But rejoice, there is a cure!

Meanwhile back in Texas most Reference Based Pricing plans are paying 120-150% of Medicare on average. Some plans have negotiated direct agreements below that ranging from 100% to 140% of Medicare.

Life at the ranch is good and getting better these days. Junior (pictured on right) says “In Texas we’ve learned from an early age to spot bullshit when we see it. There must be an exceptional abundance in N. Carolina!”

The following article says more than anything the writer intended……

Transparency for North Carolina’s State Health Plan is a Two-Way Street

Your access to health care providers and services is under attack. The State Treasurer has proposed a shortsighted new model for the State Health Plan, which provides health insurance coverage to all state employees, teachers, state retirees and their dependents.

This risky scheme will affect healthcare consumers across the state, and place an undue burden on teachers, state employees, and retirees by limiting access to the care providers they know and trust.

The State Treasurer’s plan will cut payments for services at local doctors’ offices, hospitals and health systems by more than $400 million, forcing them to cut important services and jobs.

Transparency and Hypocrisy

The State Treasurer has made bold claims about a lack of transparency in contract rates for services provided by the state’s hospitals. Yet, the State Treasurer has the pricing information because he manages all the claims data. Not only does he have the prices generally, he has every price paid for every procedure for every patient covered by the State Health Plan.

It is also important for citizens and lawmakers to understand that Blue Cross Blue Shield of North Carolina is the administrator for the State Health Plan. BCBS-NC negotiates rates for payment on behalf of the State Health Plan along with other private insurance plans. As with other businesses, the plan administrator is responsible for sharing information about claims to help the Plan better manage its expenses. Don’t be fooled by the Treasurer’s political rhetoric. The State Treasurer has all the information he needs to save money.

Ironically, not only does the Treasurer have the information he needs, but he also has conveniently failed to acknowledge the serious damage his State Health Plan proposal will do to healthcare for state employees, teachers, and retirees. It not only limits access to providers and services, but it also fails to provide employees the wellness benefits they need to improve their health.

The State Treasurer seems more interested in politicizing the State Health Plan than working to improve it

THE TREASURER’S HEALTH PLAN WILL:

Ration care and access to patients’ doctors and hospitals, restricting everyone’s choices for healthcare and providers

Force many to drive hundreds of miles for basic healthcare that is currently more accessible

Jeopardize quality of care because payments to hospitals will be reduced and government payers don’t cover the cost of healthcare services provided by our healthcare systems

Cripple local operations and services in every single healthcare system, both rural and urban, across the state

Adequately support local programs like school nurses and physical exams for high school athletic programs

The truth about how this affects us ALL

The proposed cuts to the State Health Plan will put the availability of health care services for everyone in North Carolina at risk. Aligning payments for North Carolina healthcare providers with federally mandated Medicare payments puts your healthcare in the hands of politicians. Low payments and continued financial uncertainty mean many hospitals across the state will face financial ruin that will lead to laying off employees, cutting vital health care services, and reducing the quality of remaining services.

If the State Treasurer’s goal is truly to cut costs, he needs to work with our doctors, hospitals, and health systems to focus on preserving access to healthcare necessities, coordinating healthcare services and prioritizing wellness and disease prevention, chronic disease management and weight reduction. A healthier workforce will save the state millions and increase employee satisfaction too.

Healthcare providers and the State Health Plan should partner to develop innovative solutions that put patients first and protect access and quality of care.

A Two Way Street

We can fix the State Health Plan – but blatant accusations and political gamesmanship won’t work. Our doctors, nurses and allied healthcare professionals work every day to ensure the wellbeing of our citizens. They don’t deserve to be caught up in a political agenda. We believe collaboration towards better outcomes is the only way to find real and sustainable solutions for our state health plan.

Doctors, hospitals and healthcare systems in North Carolina already are partnering with business, insurance and local governments to reduce cost, make healthcare spending more efficient and improve the general health of their communities. We stand ready to work with the State Treasurer to improve the State Health Plan, but it has to be a two-way street. Let’s stop pointing fingers and start working to build a smarter State Health Plan – protecting patients and supporting our providers.

Find out about a better path forward toward a smarter State Health Plan:

McAllen Independent School District in deep South Texas is set to interview the top three finalist for the district’s insurance consultant position this week. MISD employee benefit program is self-insured and administered by Blue Cross & Blue Shield.

Wednesday, February 20, 2019 8:00 AM

Board Room/Administration Building of the McAllen Independent School District, 2000 North 23rd Street, McAllen, Texas

Insurance consultants are not unbiased although some would argue the opposite is true. In looking at past performance it is fairly easy to predict what a consultant’s recommendation will be.

HISTORY REPEATS ITSELF

If it’s true that history repeats itself, Gallagher Benefit Services in South Texas will recommend Aetna or it’s wholly owned TPA subsidiary. HUB will recommend United Healthcare (To our knowledge HUB has never recommended an independent TPA in the South Texas market). Valley Risk will recommend an independent TPA.

THE PURPLE FISH

Valley Risk Consulting, with a history of almost always recommending independent TPA’s, does so because proven out-of-the-box solutions can only be supported by independent TPA’s and which, of course, is entirely outside the purview of status quo competitors. Valley Risk is the Purple Fish.

IT’S NOT CHOOSING A CONSULTANT, IT’S CHOOSING AN OUTCOME

It would be wise of McAllen ISD to consider each contender’s past recommendations and consider the basis upon which those recommendations were made. This will provide comfort for board members whose pre-determined preferences are almost always kept below the surface only to be disclosed when they exercise their vote.

“I wanna stay with BCBS so who is the consultant most likely to support me?” or “I like United HealthCare because PSJA, Brownsville and other local districts are with UHC, so which of the three candidates will likely support my vote for UHC?” or “I don’t believe in magic and want to try something different to improve benefits and reduce costs at the same time, so which candidate thinks out-of-the-box and can deliver?”

SMART MONEY ODDS

If BCBS is perceived to have done a “good job”, and employees are happy, then common sense dictates the Board of Trustees will likely retain Valley Risk, their current consultant. After all, moving to another BUCA with the same ole same ole won’t make much sense and would not be worth the trouble (is my doctor in-network and do I have to change doctors?).

If a financial decision must be made as an essential decision pivotal point, Valley Risk Consulting should win the bid hands down because the need for out-of-the-box strategies that only Valley Risk will bring to the table will be apparent.

Smart money has Valley Risk at 5 to 1 odds.

THE ELEPHANT IN THE ROOM

Then, of course, there are other factors that can influence consultant selection. This includes lobbying by insurance agents hoping “their man” gets the nod. Turning commission dollars into cash campaign contributions betting on the 19th hole has been known to be an effective ploy. Hospitals too may exert pressure to stay within the status quo and will push for the carrier that pays the most. And, of course, there are the local agent cartel/s who have been known to monopolize the health insurance bidding process stacked towards pre-determined outcomes. This is done by controlling the market through multiple agents working in unison. It’s like bidding on Black and Red at the same time thus never losing.

MAKING HAPPY

But at the end of the day, the philosophies of both the plan sponsor and the consultant must necessarily mirror each other in order to please all involved. Being happy is often more important than being solvent. Me Too Consultants increase their odds in winning jigs with “Oh, you like BCBS? Well I do too! or “Oh, you hate BCBS? so do I!”

MULEBRIAR’S TWO CENTS WORTH

In our opinion, if MISD wants to do something different other than the old tried and failed practices of the past 35 years, then to that end Valley Risk Consulting should be awarded the winning bid.

WHY IT DOESN’T MATTER

Life as an insurance consultant working with deep South Texas school districts can be less than satisfying. Consultant recommendations have been known to be overruled fairly often by school board members for no outward or apparent reasons. In those cases we suspect board members end up realizing they erred in their judgement of understanding who they hired in the first place.

ABOUT VALLEY RISK CONSULTING

Valley Risk Consulting is the largest independent risk management consulting firm in South

Texas, headquartered in McAllen. We serve several of the largest school districts in the region and have a combined experience level of over 45 years, specializing in Political Subdivisions and Third Party Administration.